Question: What do you think of Schlumberger Ltd. (SLB), the oilfield services company, right now? — James
Gary Kaltbaum: I think Schlumberger the company is just fine. I am just not so sure I like it as a stock here. It has had a good run already and I am worried it may be in the late stages of its move from the past couple of years.
Question: What is your opinion of GE for two to four years? I'm a senior citizen that can tolerate some risk. Thank you — Herbert
Gary Kaltbaum: I have not liked GE for years, and still don't at this point. I believe there are better places to invest. There are several reasons:
1) Wall Street just does not like companies with too many businesses. Wall Street likes definition. GE has too many parts.
2) GE is too large. The company already has $150 billion in sales. There is no way a company this size can grow like they used to. Growth rates are the key to great stocks.
3) The evidence is also in from the market itself. GE has lost all its leadership qualities. It used to be that GE would lead the market both up and down. At this point, the market couldn't care less what GE says or does.
Question: Is it wise to invest in some of the contracting companies that have been tapped to help rebuild Iraq? Halliburton (HAL), for example? Can I assume they will be there for many years to come? — Ryan (Albany, NY)
Gary Kaltbaum: I do believe companies like Halliburton will continue to benefit from the rebuilding of Iraq, but I also believe that story may already be in the stock. Watch the price of oil to determine whether you want to own Halliburton.
Question: I heard the Smart For Two car is about to take America by storm, but I'm not sure I believe the hype. Should I put a few bucks in DaimlerChrysler just in case? — Jack (North Hollywood, CA)
Gary Kaltbaum: It is very tough to gauge whether the Smart For Two Car will catch on, but even if it does, it will not be a major benefit to any company. It is not very often that one car's sales had such an impact that it would sway you to buy a company's stock. You should buy an auto company based on ALL their products, not just one car.
Question: I heard that Merck & Co. (MRK) just got the green light to distribute the new HPV vaccine, Gardasil. Should I jump in and invest in the pharma giant now? Or should I wait until the drug is in widespread use? Thanks — Janine (Long Island)
Gary Kaltbaum: You should not buy Merck & Co. because of the potential for just one product. Merck has over $22 billion in sales. No one product will make a difference. In the past, investors have made the mistake of buying because of headline news of one product. Viagra comes to mind. Investors fell all over themselves buying into Pfizer because of this product. The stock has been blasted since. I actually like Merck for other reasons. I believe the sector is now coming out if its brutal bear market that has been going on for years, as earnings catch up to valuation. Also, I believe the market is now making a bet on slower growth in the economy. Normally, when this occurs, drug stocks outperform.